LIBBEY INC. 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the plan year ended December 31, 2005 |
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or |
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to |
Commission file number 1-12084
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A. |
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Full title of the plan and the address of the plan, if different from that of
the issuer named below: |
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LIBBEY INC. RETIREMENT SAVINGS PLAN |
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B. |
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Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office: |
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LIBBEY INC.
300 Madison Ave.
Toledo, Ohio 43604 |
REQUIRED INFORMATION
Financial Statements and Exhibits as follows:
1. Financial statements
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Report of Independent Registered Public Accounting Firm |
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Statements of Net Assets Available for Benefits as of December 31, 2005, and
December 31, 2004 |
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Statements of Changes in Net Assets Available for Benefits for years ended
December 31, 2005 and December 31, 2004 |
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Notes to Financial Statements |
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Supplemental Schedule
H, Line 4i Schedule of Assets (Held at End of Year) |
2. Exhibits
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(23) |
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Consent of Independent Registered Public Accounting Firm |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrator of the
Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
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LIBBEY INC.
RETIREMENT SAVINGS PLAN |
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Dated: June 29, 2006
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Libbey Inc.
Employee Benefits Committee
Plan Administrator |
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By:
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/s/ Timothy T. Paige |
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Timothy T. Paige
Chairman
Employee Benefits Committee |
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By:
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/s/ Scott M. Sellick |
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Scott M. Sellick
Vice President and Chief Financial Officer of
Libbey Inc. and
Member of Employee Benefits Committee |
Financial Statements and
Supplemental Schedule
Libbey Inc. Retirement Savings Plan
Years Ended December 31, 2005 and 2004
With Report of Independent Registered Public Accounting Firm
Libbey Inc. Retirement Savings Plan
Financial Statements and Supplemental Schedule
Years Ended December 31, 2005 and 2004
Contents
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1 |
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Audited Financial Statements |
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2 |
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3 |
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4 |
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9 |
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EX-23 |
Report of Independent Registered Public Accounting Firm
The Libbey Inc. Employee Benefits Committee
Libbey Inc. Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits of the Libbey Inc.
Retirement Savings Plan as of December 31, 2005 and 2004, and the related statements of changes in
net assets available for benefits for the years then ended. These financial statements are the
responsibility of the Plans management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. We
were not engaged to perform an audit of the Plans internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Plans internal control over financial reporting. According,
we express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the assets available for benefits of the Plan at December 31, 2005 and 2004, and the
changes in its net assets available for benefits for the years then ended, in conformity with U.S.
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken
as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December
31, 2005 is presented for the purpose of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department for Labors Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plans management. The supplemental
schedule has been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst
& Young LLP
Toledo,
Ohio
June 26, 2006
1
Libbey Inc. Retirement Savings Plan
Statements of Net Assets Available for Benefits
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December 31 |
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2005 |
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2004 |
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Assets |
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Investments (Note 3) |
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$ |
66,824,341 |
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$ |
72,955,435 |
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Participant contribution receivable |
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2,289 |
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$ |
66,824,341 |
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$ |
72,957,724 |
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See accompanying notes.
2
Libbey Inc. Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
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Years Ended December 31 |
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2005 |
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2004 |
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Additions |
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Investment income: |
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Net (depreciation) appreciation in fair
value of investments (Note 3) |
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$ |
(2,139,817 |
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$ |
2,511,502 |
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Interest and dividends |
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340,048 |
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323,631 |
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(1,799,769 |
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2,835,133 |
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Contributions: |
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Participants |
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3,553,540 |
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3,802,796 |
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Employer |
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1,133,196 |
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1,172,727 |
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4,686,736 |
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4,975,523 |
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Net transfer from Libbey Inc. Supplemental
Retirement Plan |
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229,157 |
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230,701 |
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3,116,124 |
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8,041,357 |
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Deductions |
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Participant withdrawals or benefits paid directly
to participants |
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(9,244,548 |
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(4,283,256 |
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Other |
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(4,959 |
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(60,740 |
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Net (decrease) increase |
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(6,133,383 |
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3,697,361 |
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Net assets available for benefits: |
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Beginning of year |
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72,957,724 |
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69,260,363 |
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End of year |
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$ |
66,824,341 |
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$ |
72,957,724 |
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See accompanying notes.
3
Libbey Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2005
1. Description of Plan
General
The Libbey Inc. Retirement Savings Plan (the Plan) was adopted by Libbey Inc. (the Company) for the
benefit of eligible salaried employees.
The Plan is a defined contribution plan which provides eligible employees the opportunity to make
pretax and/or after tax contributions, in specific percentages, within guidelines established by
the Libbey Inc. Employee Benefits Committee (the Committee). Participant contributions are limited
to 50% of their eligible wages and are 100% vested immediately. Contributions may be divided at the
participants discretion among the various investment options from 1% to 100%, with no limit on the
number of options selected. A participant may elect to change the percentage of annual compensation
to be contributed and any such changes shall be effective as soon as administratively feasible.
The benefit to which a participant is entitled is the benefit that can be provided from the value
of the participants account.
The Company contributes to the Plan on behalf of each participant an amount equal to fifty percent
(50%) of the participants pretax contributions, not to exceed three percent (3%) of the
participants eligible compensation. Company matching contributions are invested in the Libbey
Company Stock Fund and may be immediately redirected by the participant. Company matching
contributions are immediately 100% vested.
Within certain limitations, a participant may also transfer into the Plan a rollover contribution
from another qualified plan.
Participants may transfer existing fund balances among the various investment funds daily.
The above information is intended as a general description of the Plans operating guidelines.
Reference should be made to the Plan document for more specific provisions, including benefit
payments.
4
Libbey Inc. Retirement Savings Plan
Notes to Financial Statements (continued)
1. Description of Plan (continued)
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to
discontinue its contributions at any time and to terminate the Plan subject to the provisions of
Employee Retirement Income Security Act of 1974 (ERISA). Upon termination, the entire interest of
each participants account is distributed to the participants.
Trusteed Assets
For the years ended December 31, 2005 and 2004, all of the assets of the Plan were held by the
Trustee, JP Morgan Chase Bank.
2. Summary of Accounting Policies
Investment Valuation and Income Recognition
Investments in the four Harbor Funds, three JP Morgan Funds, five American Century Investment
Funds, the AIM Small Cap Growth Fund, the Barclays Equity Index Fund, the Dodge & Cox Stock Fund,
the American Funds Growth Fund of America, and the funds holding Company common stock are recorded
at fair value based on their respective quoted market values at year end. The synthetic Guaranteed
Investment Contracts (GICs) are valued at contract value. The participant loans are valued at
their outstanding balances, which approximate fair value. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend date.
Plan Expenses
Substantially all Plan administrative expenses are paid by the Company.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
in the financial statements and accompanying notes. Actual results could differ from those
estimates.
5
Libbey Inc. Retirement Savings Plan
Notes to Financial Statements (continued)
3. Investments
Investments that represent 5% or more of fair value of the Plans net assets are as follows:
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December 31 |
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2005 |
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2004 |
Libbey Common Stock* |
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$ |
5,941,797 |
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$ |
12,541,879 |
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JP Morgan Stable Value* |
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8,851,668 |
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10,411,092 |
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Harbor International Fund* |
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8,452,707 |
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7,505,443 |
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Harbor Capital Appreciation Fund* |
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6,187,355 |
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6,097,234 |
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Harbor Bond Fund* |
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5,167,602 |
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5,742,601 |
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Dodge and Cox Stock Fund |
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5,588,275 |
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5,338,355 |
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American Century Investments Small Capital Value |
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3,992,011 |
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4,645,147 |
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Harbor Large Capital Value Fund* |
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3,847,253 |
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3,897,298 |
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AIM Small Cap Growth |
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3,471,536 |
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** |
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The Fund is sponsored by the Plan Trustee or represents a party in interest. |
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Less than 5% of fair value of Plans net assets. |
During 2005 and 2004, the Plans investments (including investments bought, sold, as well as held
during the year) (depreciated) appreciated in fair value as determined by quoted market prices as
follows:
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December 31 |
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2005 |
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2004 |
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Common stock |
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$ |
(6,852,436 |
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$ |
(3,121,041 |
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Mutual funds |
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4,712,619 |
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5,632,543 |
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$ |
(2,139,817 |
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$ |
2,511,502 |
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6
Libbey Inc. Retirement Savings Plan
Notes to Financial Statements (continued)
4. Synthetic Guaranteed Investment Contracts
During 2005 and 2004, the Plan had investments in synthetic guaranteed investment contracts. The
account is credited with earnings on the underlying investments and is reported at contract value
in accordance with Statement of Position 94-4, Reporting of Investment Contracts Held by Health and
Welfare Benefit Plans and Defined Contribution Pension Plans. Contract value represents
contributions made under the contract, plus earnings, less participant withdrawals. Participants
may direct the withdrawal or transfer of all or a portion of their investment at contract value.
The crediting interest rate on the contract is reset on a quarterly basis. As of December 31, 2005
and 2004, these contracts had a contract value of $8,851,668 and $10,441,092, respectively. The
fair market value was $8,706,713 and $10,648,859 as of December 31, 2005 and 2004, respectively.
The crediting interest rate on these investments was 5.38% and 4.72% at December 31, 2005 and 2004,
respectively. The average yield on these investments was 5.17% and 4.72% for the years ended
December 31, 2005 and 2004, respectively.
In December 2005, the Financial Accounting Standards Board issued Staff Position Nos. AAG INV-1 and
SOP 94-4-1 (FSP), which require that all investments held by an investment company be reported at
fair value, even though contract value is the relevant measurement attribute for the portion of net
assets attributable to fully benefit-responsive investment contracts. The FSP will be adopted by
the Company and the Plan effective December 31, 2006, with retroactive application to all prior
periods presented. The Company and the Plan do not believe that the adoption of Staff Position Nos.
AAG INV-1 and SOP 94-4-1 will have a material impact on the Statement of Net Assets Available for
Benefits.
5. Loan Fund
The Plan permits a participant to borrow a portion of their existing account balance. Loans are
made subject to certain conditions and limitations specified in the Plan document and are repaid in
semi-monthly, bi-weekly, or weekly installments, including interest, over periods of between one
and ten years. Participant loans are collateralized by their account balances. The rate at which
loans bear interest is established at the inception of the borrowing, based on the prime rate then
being charged by the Trustee plus 1%. Repayments of loans, including the interest portion thereof,
are reinvested on the participants behalf in accordance with their current choice of investment
options.
7
Libbey Inc. Retirement Savings Plan
Notes to Financial Statements (continued)
6. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service (IRS) dated February
27, 2004, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the
Code) and, therefore, the related trust is exempt from taxation. Subsequent to the determination by
the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with
the Code to maintain its qualification. The plan administrator believes the Plan is being operated
in compliance with the applicable requirements of the Code and, therefore, believes that the Plan,
as amended, is qualified and the related trust is tax exempt.
7. Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various
risks such as interest rate, market and credit risks. Due to the level of risk associated with
certain investment securities, it is at least reasonably possible that changes in value of
investment securities will occur in the near term and that such changes could materially affect
participants account balances and the amounts reported in the statements of net assets available
for benefits.
8
Libbey Inc. Retirement Savings Plan
EIN #34-1559357 Plan #001
Schedule H, Line 4i Schedule of Assets
(Held at End of Year)
December 31, 2005
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Description of Investment, Including |
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Identity of Issue, Borrower, |
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Maturity Date, Par, or Maturity |
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Current |
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Lessor, or Similar Party |
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Value Rate of Interest, |
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Value |
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Mutual funds: |
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*JP Morgan |
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896,632 shares of Public Bonds |
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$ |
8,522,486 |
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12,688 shares of Government Securities |
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12,688 |
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171,539 shares of Liquidity Fund |
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171,539 |
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*Harbor |
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172,399 shares of International Fund |
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8,452,707 |
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444,716 shares of Bond Fund |
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5,167,602 |
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190,791 shares of Capital Appreciation Fund |
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6,187,355 |
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226,309 shares of Large Capital Value Fund |
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3,847,253 |
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AIM |
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126,192 shares of Small Cap Growth |
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3,471,536 |
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American Century Investments |
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414,109 shares of Small Capital Value |
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3,992,011 |
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371,094 shares of Strategic Moderate |
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2,501,175 |
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250,015 shares of Equity Income |
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1,955,121 |
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155,545 shares of Strategic Aggressive |
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1,224,139 |
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82,241 shares of Strategic Conservative |
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452,873 |
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Barclays |
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38,489 shares of Equity Index Fund |
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1,451,410 |
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Dodge & Cox |
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40,725 shares of Stock Fund |
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5,588,275 |
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American Funds |
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86,332 shares of Growth Fund of America |
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2,664,190 |
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Common stock: |
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*Libbey Inc. |
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580,276 shares of Common Stock |
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5,941,797 |
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Money market funds: |
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*JP Morgan |
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3,240,363 units, 100% US Treasury |
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3,240,363 |
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Synthetic wrapper value |
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Synthetic Guaranteed Investment Contract |
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144,955 |
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* Participant loans |
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5.0% to 10.5% |
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1,834,866 |
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Total investments |
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$ |
66,824,341 |
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* |
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Indicates a party-in-interest to the Plan. |
9